This month we’ve seen some big
real estate moves in play, and see developers going all out with
new projects that will continue to change the skyline and living
trends over the next few years.

In the commercial real
estate headlines...

While the latest Brooklyn Rental
Market Report shows improvements and ongoing growth in some
sectors, and the rent certainly still isn’t cheap in New York,
Manhattan is continuing to struggle, especially on the commercial
front.

The economy is great, capital is
flush, yet despite the fed holding rates steady, we are still
seeing some diverging trends in the data and media.

Disney is going all in on New
York real estate, with a new deal with Trinity Church for Four
Hudson Square. Disney plans to relocate its corporate headquarters
to the new site.

In other dealmaker news
Z NYC Hotel on Long Island just sold for $43 million. The
lot also includes a separate building with 109 apartments in the
rear.

3
World Trade Center just made its formal debut on the market.
Opening as the city’s fifth tallest building, with 44 elevators,
and 80 floors, it is already 38% leased according to AM New
York.

On the residential market,
One Wall Street is nearing the end of its conversion, with
sales expected to begin in the next few months. Current pricing is
anticipated to average $3 million for entry apartments, with a
triplex penthouse asking over $38 million. Over half of the units
will only be studios or one-bedroom apartments. Retail space will
include the building having its own Whole Foods
supermarket.

Prices at One Wall Street may
seem like even more of a steal when you look at the cost of today’s
micro-apartments in New York City. Graham Hill who sold his
last tiny living space for just under $1 million, just listed a 350
square foot apartment in Soho for $750,000.

Those looking for more of a deal
might want to check out
The Gallivant hotel in Times Square. The lender is reportedly
set to hold a foreclosure sale of the mortgage, and may slash the
debt on the property by around half according to the NY Post. This
month will also see the foreclosure auction of One Bennett Park.
The site has as much as 276,000 square feet to develop for a
residential project.

Still, while some older buildings
may still be struggling to find the right footing, there appears to
be no lack of appetite for redeveloping and constructing new
projects in the Big Apple. In fact, data from YIMBY shows an almost
70% surge in
development filings in the first half of 2018.

More are in the works too. Like
185 Broadway in FiDi, and pre-filing plans to turn it into a 37
story residential building with 279 apartment units. Another
668-foot tower at
200 Amsterdam Avenue plans to bring 112 new apartment
units to the Upper West Side.

New York City is also currently
seeking proposals to develop and operate 200,000 square feet of
media and film production space at the
Sunset Park waterfront.

In other news, the start of the
year long closure of the N, D and R subway lines in Brooklyn got
off to a rough start, with the MTA relying on Twitter to remind
travellers of the shutdown that will last at least until July
2019.

While New York may be far from
rolling out an all solar mandate for building like California, a
new
energy efficient benchmarkand grading system is debuting for
commercial buildings in the city. The letter based grade system,
which will post ratings publicly on the properties is hoped to put
peer pressure on owners to become greener and help reduce
greenhouse gas emissions by 80% within the next 32
years.

Proving it still isn’t easy for
renters in the city, one Bushwick building just launched a lottery
for 3 ‘affordable’ housing units. These one and two bedroom units
from from $1,979 to $2,387 per month. Income limits for applicants
run from $67,852 to $146,510. That still doesn’t leave much left
over for a family bringing in just over $5,000 a month, before
taxes.

The Rent Guidelines Board has
also voted in a new rent hike that begins this fall. Almost one
million rent stabilized tenants in the city could see their rent go
up by as much as 2.5%.

Coworking giant WeWork is making
waves with a range of new services. That now includes designing
office spaces, like UBS’ headquarters. In some good news for real
estate brokers, WeWork appears to be reversing any downward
pressure on brokerage commissions, by doubling its leasing rates to
20% from the traditional 10.

For Brooklyn Real Estate
News

Brooklyn continues to advance
with improvements in the rental market, new developments, and
capital investment.

Earlier this year we saw some
rent discounts due to the L train
shutdown, and landlords offering more deals to attract new
tenants and sign more leases. That pressure seems to have eased,
with rents mostly coming back up again.

The Economic Development
Corporation recently unveiled and opened another 500,000 square
feet of space at the
renovated Brooklyn Army Terminal. As part of a larger 4 million
square foot space, the site houses innovative business including a
3D printed clothing company, and is heralded as an affordable
location for housing startups and small businesses.

Another skyline redefining
Brooklyn office tower just secured the financing to go ahead as
well. The 34 story Class A tower at One Willoughby Square in
Downtown Brooklyn will receive a $235M from Otera
Capital.

Extell, has scored double that,
with $530M in new financing for a
new condo tower in Brooklyn. The project which is hoped to be
completed in 2020, will rise 68 stories, becoming the tallest
residential building under construction in Brooklyn right
now.

Another
luxury apartment conversionon Williamsburg’s North 7th Street
is about to launch sales. 29 of the 45 units at the old soap
factory site will have private outdoor space. Amenities include a
children’s playroom with a view, rooftop fitness center, and
additional amenities for purchase such as cabanas and parking
spaces.

Dumbo is getting another
gourmet market, with Wholesome Farms Market’s third location in
Brooklyn being inked at 108 Jay Street. The chain will take on a
3,000 square foot retail condo at the site for 15 years according
to the Commercial Observer.

The above activity has certainly
added to the borough’s traction. BisNow reports that Brooklyn has
seen $4 billion worth of commercial properties trade hands in the
first half of 2018. 44% more than in 2017.

In other
boroughs

NYC housing
inventory has been rising to record levels. Im May,
Manhattan inventory rose 16.7% year over year. Brooklyn inventory
went up 23.4% and Queens saw listing levels up 42.8%. As a result 1
in 6 home listings saw a price discount.

While the US economy appears
strong and growing, these increased inventory levels, high prices
and higher property taxes, have even led to declining sales in the
wealthy playground of The Hamptons. CNBC reports that quarter two
sales fell by almost 13% in
the Hamptons. Median home prices dropped by 5.3%, taking the
average home price under $1 million.

For Landlords and
Investors

New York City landlords are
increasingly being pressured to make the most out of every square
foot. Rental market reports show distinct differences in rates that
various amenities can provide, and which may no longer make much of
a difference. Now, between sky high housing costs, taxes and the
trend
in coliving, landlords are also looking at what they can get
for each room. Should they be leasing by the room instead of an
apartment? Or even by the bed or sofa? These strategies may boost
potential income and help diversify assets, yet they can also be
far more property management intensive.

However, New York City landlords
still need to be very careful when considering engaging in short
term leasing. A new bill passed in July 2018 claims to force
Airbnbto had over listing data to authorities who can pursue
them for violations with very expensive fines and
penalties.

The New York City controller's
office has found that upfront move in costs are just too expensive.
A study shows many are paying as much as 25% of their annual
income, just to move into a new apartment each year. That doesn’t
include their ongoing monthly rent. Among the current solutions
being worked on is capping the security deposit requirement allowed
by landlords to no more than 1 month’s rent.

In
conclusion...

It has been a busy first half of
the year for New York real estate market already. Big players,
buyers, and developers haven’t been shy. In fact, we continue to
see a run of aggressive new projects coming onto the market and
filing plans. Brooklyn being one of the biggest beneficiaries of
this action, and receiving much of the investment capital. Rents
have been blown around by a variety of factors, though appear to be
solidly marching on. Housing inventory may be growing, though there
are many economic factors which could impact the direction of the
market through the end of the year.

Well, that’s it for this month’s
round up. Look out for our other upcoming reports, and check out
the latest data on the Manhattan and Brooklyn residential and
multi-family market, and which features and neighborhoods are
yielding the best rents at NewYorkMarketReports.com.

Make sure you like and share this
report, and leave your comments on this news, or any trends you
think we overlooked or you want to hear more about in the comments
section.

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From the Ratner Team, this is the Brooklyn Made Podcast, a show about Real Estate, Entrepreneurs, Businesses and the professionals behind one of the hottest real estate markets in the world.
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